Accounting Theory

Faculty
Commerce & Business Administration
Department
Accounting
Course Code
ACCT 4850
Credits
3.00
Semester Length
15 Weeks X 4 Hours per week = 60 Hours
Max Class Size
30
Method Of Instruction
Lecture
Online
Hybrid
Typically Offered
Fall
Summer
Winter
Campus
Online

Overview

Course Description
This course will provide students with a critical examination of problem areas of current interest in financial accounting theory. Practical and theoretical problems of the present value model, historical costs, decision usefulness, portfolio risk, efficient securities markets, fair-value-oriented standards with application to traditional accounting, positive accounting theory, game and agency theory, executive compensation and earnings management will be examined. Economic and political issues and criteria related to standard setting, in Canada, the U.S., and internationally, will also be discussed, as well as the contribution of economics, finance and other disciplines to accounting theory.
Course Content
  1. Accounting under ideal conditions:  present value model, reserve recognition accounting, historical cost accounting.
  2. Decision usefulness approach to financial reporting: single person decision theory, rational, risk averse investor, portfolio diversification, optimal investment decisions, portfolio risk.
  3. Efficient securities markets and their implications for financial reporting: informativeness of price, capital asset pricing model, information asymmetry.
  4. Information perspective on decision usefulness: market response, earnings response coefficients, unusual, non-recurring and extraordinary items.
  5. Measurement perspective on decision usefulness: theories relating to the efficiency of securities markets.
  6. Measurement perspective applications: traditional reporting, fair-value-oriented standards, financial instruments, accounting for intangibles, reporting on risk.
  7. Economic consequences: employee stock options, government assistance, successful-efforts accounting, positive accounting theory (PAT).
  8. Analysis of conflict: game theory (non-cooperative and cooperative), agency theory.
  9. Executive compensation: theory, incentives, compensation plans, role of risk, politics.
  10. Earnings management: motivations, patterns, “good” and “bad” side of earnings management.
  11. Standard setting – economic issues: private incentives for information production, sources of market failure, regulation of economic activity and decentralization regulation.
  12. Standard setting – political issues: public interest and interest group theories; standard setting in Canada and the U.S., International Accounting Standards Boards (IASB), conflict and compromise, criteria for standard setting.
Methods Of Instruction

In-class lectures and/or on-line.

Means of Assessment

 

Assignments/projects/cases/tests  30%
Midterm examination  35%
Final examination  35%
  100%

 

STUDENTS MUST WRITE BOTH THE MIDTERM EXAMINATION AND THE FINAL EXAMINATION TO OBTAIN CREDIT FOR THE COURSE.

 

To pass this course, students must obtain a minimum of 50% on invigilated assessments, with the 50% calculated on a weighted average basis.

 

Invigilated assessments include, in-class quizzes, in-class tests, midterm exam(s) and the final exam.

 

Learning Outcomes

At the end of the course, the successful student should be able to:

  1. describe various theories that underlie financial accounting and reporting
  2. explan the impact of accounting policies on financial accounting and reporting
  3. explain the impact of financial accounting and reporting on securities markets
  4. explain game and agency theory and their implications for accounting
  5. explain the criteria, and the economic and political issues involved in the standard setting process
  6. demonstrate awareness of ethical and professional standards and responsibilities of financial management professionals
Textbook Materials

Textbooks and Materials to be Purchased by Students

Required: William R. Scott.  Financial Accounting Theory, latest Canadian edition.  Prentice-Hall, Toronto, or other textbooks as approved by department.

Optional (at discretion of instructor): Schroeder, Clark and Cathey, Financial Accounting Theory and Analysis: text readings and cases, latest edition. John Wiley & Sons Inc.

Instructor compiled materials (if applicable)

Only Faculty of Commerce and Business approved calculators may be used for tests and examinations.

Requisites

Prerequisites

(ACCT 3310 with C or better OR ACCT 3410 with C or better) AND (FINC 2340 with C or better)

OR Instructor's Approval

Corequisites

Courses listed here must be completed either prior to or simultaneously with this course:

  • No corequisite courses

Equivalencies

Courses listed here are equivalent to this course and cannot be taken for further credit:

  • No equivalency courses

Requisite for

This course is not required for any other course.

Course Guidelines

Course Guidelines for previous years are viewable by selecting the version desired. If you took this course and do not see a listing for the starting semester / year of the course, consider the previous version as the applicable version.

Course Transfers

Institution Transfer Details Effective Dates
Acsenda School of Management (ASM) ASM ACCT 435 (3) 2013/09/01 to -
Athabasca University (AU) AU ACCT 4XX (3) 2013/09/01 to -
Capilano University (CAPU) CAPU BFIN 3XX (3) 2013/09/01 to -
College of the Rockies (COTR) COTR ACCT 4XX (3) 2013/09/01 to -
Kwantlen Polytechnic University (KPU) KPU ACCT 4199 (3) 2007/09/01 to -
Langara College (LANG) LANG FMGT 4221 (3) 2009/01/01 to -
Simon Fraser University (SFU) No credit 2007/09/01 to -
Thompson Rivers University (TRU) TRU BBUS 4210 (3) 2010/09/01 to -
Thompson Rivers University (TRU) TRU BBUS 421 (3) 2007/09/01 to 2010/08/31
Trinity Western University (TWU) TWU BUSI 3XX (3) 2007/09/01 to -
University Canada West (UCW) UCW ACCT 3XX (3) 2013/09/01 to -
University of British Columbia - Vancouver (UBCV) No credit 2013/09/01 to -
University of Northern BC (UNBC) UNBC COMM 4XX (3) 2013/09/01 to -
University of the Fraser Valley (UFV) UFV BUS 443 (3) 2007/09/01 to -
University of Victoria (UVIC) UVIC COM 4XX (1.5) 2007/09/01 to -
Vancouver Island University (VIU) VIU ACCT 421 (3) 2020/01/01 to -
Vancouver Island University (VIU) VIU ACCT 4th (3) 2013/09/01 to 2019/12/31
Vancouver Island University (VIU) VIU ACCT 4th (3) 2013/09/01 to -

Course Offerings

Fall 2020

CRN
Days
Dates
Start Date
End Date
Instructor
Status
Location
33926
Wed
08-Sep-2020
- 07-Dec-2020
08-Sep-2020
07-Dec-2020
Midgley
Keenan
Open
Online
This course will include synchronous on-line activities. Students should plan to be available on-line at scheduled course times.
Max
Enrolled
Remaining
Waitlist
30
22
8
0
Days
Building
Room
Time
Wed
18:30 - 21:20
CRN
Days
Dates
Start Date
End Date
Instructor
Status
Location
34835
Thu
08-Sep-2020
- 07-Dec-2020
08-Sep-2020
07-Dec-2020
Garabedian
Arsineh
Open
Online
This course will include synchronous on-line activities. Students should plan to be available on-line at scheduled course times.
Max
Enrolled
Remaining
Waitlist
30
29
1
0
Days
Building
Room
Time
Thu
12:30 - 15:20